Exploring cost estimation accuracy and its implications for cost overruns and delays in small-scale construction projects: evidence from Sri Lanka

Abstract

This study investigates the relationship between cost estimation accuracy and project outcomes, specifically cost overruns and project delays in small-scale construction projects in Sri Lanka. A qualitative research approach was adopted, supported by a descriptive-analytical, cross-sectional design. Data were collected through semi-structured interviews with construction professionals, including contractors, project managers, and quantity surveyors. Thematic analysis was employed to identify key patterns and relationships, while findings were contextualised through a review of relevant literature. The results reveal that cost estimation inaccuracies are widespread and arise from multiple interrelated factors, including incomplete project scope, lack of reliable cost data, limited professional expertise, and significant material price volatility. These inaccuracies were found to have a direct and substantial impact on project performance, with cost overruns commonly ranging between 20–40% and delays frequently extending project timelines. The study also highlights the presence of a “cost-delay spiral,” where financial shortfalls lead to project interruptions, further escalating both time and cost. Additionally, systemic factors such as competitive bidding pressures, client preferences for low estimates, and informal contractual practices contribute to the persistence of estimation inaccuracies. Study concludes that improving cost estimation accuracy requires a holistic approach, including enhanced professional engagement, improved data systems, and stronger contractual frameworks. These improvements are essential for enhancing the reliability and sustainability of small-scale construction projects in Sri Lanka.